Gold ETF Traders Should Keep These 5 Factors in Mind

As the gold market makes an impressive bull run this year, precious metals exchange traded fund (ETF) investors will have to watch a handful of factors to gauge how far the rally can keep going.

Year-to-date, the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) have returned over 21%.

Comex gold futures were hovering at around $1,287.8 per ounce Tuesday and briefly traded above $1,300 per ounce, a 15-month high.

As gold bugs root for an extended rally, traders will have to monitor the Federal Reserve, the U.S. dollar, investment demand, China & India and a potential Brexit for further cues on where the bullion is heading, writes Henry Sanderson for the Financial Times.

The bullion was depressed last year ahead of the Federal Reserve’s first interest rate hike in almost a decade. However, with the Fed signalling a more cautious monetary policy amid sluggish growth, gold is finding further support from a prolonged low-rate environment. Nevertheless, if the Fed does hike rates, investors will have to look to real interest rates.

“Even if you have a situation where the Fed does raise rates two or three times but inflation has already taken root real rates can remain low or even negative so there’s no reason that gold can’t move higher,” James Luke, a fund manager at Schroders, told the Financial Times. “Particularly with the amount of negative yielding assets in the investment universe and serious concerns over post-QE stock market health.”